Advancing a Free Society

A federal spending cap: the ingredient that might break the budget logjam

Friday, September 2, 2011

The 12-member budget “super-committee” established by the recent debt ceiling legislation faces a tall order: to get seven of its members to agree to $1.5 trillion in deficit reduction over the next 10 years.

The recent history of bipartisan negotiations has much to tell us about which tactical approaches might maximize the committee’s chances of success. It also has much to teach us about the substantive compromises that might be reached. In particular, we should not anticipate a bipartisan accord on tax policy in the absence of a binding commitment to a hard cap on total federal spending as a percentage of GDP.

The two sides start with different assumptions: Republicans don’t want to raise taxes, whereas Democrats believe taxes need to be raised. But where recent White House-led budget discussions collapsed over the tax issue, all three Senate Republicans on the Simpson-Bowles commission supported a plan containing sweeping changes to tax law. Why were the results so different?

Continue reading Charles Blahous…

(photo credit: American Sherpa)